Bitmain’s self-mining conflicts with their IPO narrative

By Leo Zhang

Jul 28, 2018

As the industry titan Bitmain gears up for IPO, the company is working hard to push out positive PR. Recently, Bitmain published a blog post stating that the company does not engage in any self-mining activities, nor does it tolerate such kind of behavior. Self-mining is a practice whereby ASIC manufacturers turn the machines on for themselves prior to distributing them to the retail market, hence gaining absolute advantages on hashrate. Bitmain has long being suspected of engaging in self-mining. Soon after Bitmain published the statement, the developer of SiaStats did a deep dive on the SiaCoin blocks that are highly likely to be mined by Bitmain in secret. Despite all these accusations, interests in Bitmain stock is still red-hot. Has the mining titan already acculumated unstoppable momentum? Or do the capital markets not care about any of these issues in light of Bitmain's incredible profits?

We've just published our Transparency Policy for Shipping and Mining Practices. It includes our disclosure of 'self-mining' hashrate for all blockchains that we mine, commitment to greater transparency and zero-tolerance policy on 'secret mining'. Read on: https://t.co/2ajHpYeCJ4

"Using an automated script, SiaStats found more than 2100 new blocks that Antpool rejects to claim. These blocks have been added to SiaStats databases, and more blocks are automatically being added as soon as their payouts are sent to known Antpool’s master addresses. The most interesting fact is that the oldest block we can track of Antpool is #132204, dated on November 17th, what means that Bitmain mined Siacoins in secret for exactly 2 months."

"In this protocol, there is a central PoS chain which stores and manages the current set of active PoS validators. The only mechanism available to become a validator initially is to send a transaction on the existing PoW main chain containing 32 ETH. When you do so, as soon as the PoS chain processes that block, you will be queued, and eventually inducted as an active validator until you either voluntarily deregister or you are forcibly deregistered as a penalty for misbehavior."

"It looks like the next batch of Intel processors, probably branded 9th generation, is going to shake this situation up further. Benchmarks found in the SiSoft Sandra database list a Core i7-9700K processor. This increases the core count from the current six cores in the 8th generation Coffee Lake parts to eight cores, but, even though it's an i7 chip, it doesn't appear to have hyperthreading available."

"Decentralization is part of a bigger playbook of legal tactics used to keep technologies alive despite the best efforts of a hostile government. Decentralization doesn’t work in a vacuum, mainstream decentralized systems require a degree of activism to keep the system working"

"Contractors can offer a potential regulatory break, too. Seattle recently weighed a tax based on the staff headcount companies have, a way to reap more from local giant Amazon. Officials in Google's hometown have voiced support. A spokeswoman for Google declined to comment."

"Credit-rating companies such as Standard & Poor’s and Moody’s have recently warned that this surge in corporate borrowing and lending has led to a noticeable decline in the quality of the loans. The borrowers have lower credit ratings. The loans contain fewer of the standard conditions that are meant to protect lenders. And the rating companies calculate that lenders should expect to recover less of their money if the borrowers default or go into bankruptcy."